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Box 1 Having considered different There are a number of differing views as to what constitutes innovation, definitions of innovation, it is now including the following: worthwhile looking at the realities. • “Innovation is the successful exploitation of new ideas” – For business innovation, the “4Ps Innovation Unit (2004) UK Department of Trade and Industry. approach can be used to explore • “Industrial innovation includes the technical, design, opportunities for innovation.”5 manufacturing, management and commercial activities involved Essentially, the “4Ps” relate to in the marketing of a new (or improved) product or the first innovation focusing on the product, commercial use of a new (or improved) process or equipment” – Chris Freeman (1982) The Economics of Industrial Innovation, 2nd process, position or paradigm. The edition, Pinter, London. first two are obvious, with • “Innovation is the specific tool of entrepreneurs, the means by numerous examples, including which they exploit change as an opportunity for a different revised or new computer operating business or service. It is capable of being presented as a systems, new car models, discipline, capable of being learned, capable of being practised” – Peter Drucker (1985) Innovation and Entrepreneurship, Harper & (product), or extensions of product Row, New York. ranges, improved operations • “Companies achieve competitive advantage through acts of (process). Position considers the innovation. They approach innovation in its broadest sense, target consumer and the purchase including both new technologies and new ways of doing things” – decision rationale. Examples Michael Porter (1990) The Competitive Advantage of Nations, include low-­‐cost airlines and on-­‐ “Vivamus porta Macmillan, London. line customisation of products. • “An innovative business is one which lives and breathes “outside est sed est.” the box”. It is not just good ideas, it is a combination of good ideas, Paradigm is a more difficult motivated staff and an instinctive understanding of what your concept. It is defined as “how we customer wants” – Richard Branson (1998) DTI Innovation frame what we do.”5 Examples Lecture. include new platforms, such as IBM, reinventing itself as a consultancy business, or i Tunes. Innovation can be further split into The European Innovation Progress Report, 20063 defines incremental, radical and innovation as being “about change and the ability to manage discontinuous. The former, change over time. Innovation can be about the successful generally more prevalent is ‘doing exploitation of new ideas in the form of a new or improved something better’. product or service but it can also be about the way in which a product or service is delivered. Equally, innovation can be Radical innovation, which is more about creatively positioning (or marketing) an existing elusive, is doing something product, or about changing the business model (a new different. paradigm).” Ahmed and Shepherd4 “discern a number of characteristics”, The most elusive, and potentially and these are set out in Box 2. These, it will be noted, go even threatening is discontinuous further and look outside the firm as well. Indeed, innovation innovation. This results in can also be considered as a non-­‐business activity, think of significant change, often from the legislation, the changes in fashion, the advancement of emergence of completely new, knowledge, for example. unpredictable markets or as a result of a new technological In answer to the two questions posed above, innovation is breakthrough. It might come from more than the introduction of new to the world products or a change in market behaviour services and invention is only one element of innovation. (think of real fur coats!), or be a result of a terrorist event (World Trade Centre, 9/11). Alternatively,

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Box 2 it could be business model innovation – Amazon springs to Ahmed and Shepherd’s characteristics are: mind. But the essence of • “Innovation as creation (invention): The focus is on use of discontinuous innovation is that it resources (people, time and money) to invent or develop a new tends to be unpredictable. product, service, new way of doing things, new way of thinking about things. • Innovation as diffusion and learning: The focus is on acquiring, This form of innovation will supporting or using a product, service or ideas. change the organisation in many • Innovation as an event: The focus of attention here is on a discrete ways. New technology may be event, such as the development of a single product, service, idea or needed as well as, new processes, decision. new customers, new knowledge, • Innovation as a (stream of innovations) trajectory: This is recognition that a single act of innovation (as that in a discrete and possibly a new business event) can facilitate a family of innovations to be derived from the model. Incremental innovation fit original source. into existing core competencies • Innovation as change (incremental or radical): Innovation enacts and the core business. change. Some innovations are minor adjustments whilst other innovations are radical or discontinuous in nature. There is an unresolved debate as • Innovation as a (firm-­‐level) process: In this view innovation is not a single act, but a series of activities that are carried out by a firm to whether companies need both to lead to the production of an outcome (namely, the innovation). sorts to compete in the long-­‐term, • Innovation as a context (region, nature, etc.) level process. This but certainly, incremental “Vivamus porta view sees innovation as an act beyond the confines of an innovation is required as a est sed est.” individual or firm. The view captures institutional frameworks, socio-­‐political networks, and proximal factor endowments as minimum. important factors in the act of innovation. The focus is switched from the firm to the peculiar endowments and characteristics of a Research undertaken in 2009 (see specific context (region, nation, etc.)” Chart 1) shows the percentage of respondents who have undertaken the identified forms of innovation, with new or significantly improved Chart 1 Has your company introduced any of the following services being undertaken by 50% innovations since 2006? of the 5,238 enterprises New or signikicantly improved interviewed across Europe. marketing strategies Responses from UK organisations are also shown for comparison. New or signikicantly improved products Having regard to the above comments, when considering New or signikicantly improved innovation, we look at five main processes UK areas: New or signikicantly improved organisational structures EU27 • Innovation strategy; • Ideas; New or signikicantly improved • Prioritisation; services • Implementation; and 0 20 40 60 • People and organisation. % of Yes It is only by linking and analysing Source: Innobarometer 2009: Analytical Report6 these five elements (three of which, ideas, prioritisation and implementation form the phases of

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Aliquam dolor. the traditional development funnel) that a fuller understanding of innovation can be reached. To conclude, innovation is more than just simple invention, or indeed, ‘new product development’. It needs to be commercialised and exploited. It involves the whole business, and particularly its ethos or culture. It can be relatively simple, and low key, or it can be more radical and possibly, byline threatening to existing players. It encompasses Imore than just goods, it Lorem psum includes services, markets, processes, paradigms, and positions as well. We Incremental, radical, or all innovate, we do not always realise discontinuous? that we are doing so. 1. Schumpeter (1934) The Theory of Economic Development Harvard University Press, Boston 2. OECD (1981) The Measurement of Scientific and Technical Activities OECD, Paris 3. EIPR (2006) European Innovation Progress Report Office for Official Publications of the European Communities, Luxembourg 4. Ahmed and Shepherd (2010) Innovation Management Context, strategies, systems and processes FT Prentice Hall, Harlow 5. Tidd and Bessant (2009) Managing Innovation Integrating Technological, Market and Organisational Change 4th edition. Wiley, Chichester 6. Flash Eurobarometer 267 – The Gallup Organisation (2009) Innobarometer 2009 Analytical Report European Commission Founded in 2010, Innovation for Growth is a business consultancy firm that specialises in the provision of advice to small and medium sized enterprises. We work with companies from all sectors undertaking innovation audits, and providing innovation advice so our clients can achieve their growth aspirations. We also undertake desktop, business research, enabling our clients to concentrate on running their business. Innovation for Growth Limited For more information, contact Weir Farm Lower Road Chris Mobbs at Blackthorn Innovation for Growth Nr Bicester Oxfordshire OX25 1TG Email: enquiries@innovationforgrowth.co.uk +44 (0)1869 243 394 or www.innovationforgrowth.co.uk Via the website: enquiries@innovationforgrowth.co.uk www.innovationforgrowth.co.uk Registered in England and Wales or Registered number: 7387935 Telephone: +44 (0)1869 243 394